States Face New Imperative to Boost Competitiveness

Five states-Massachusetts, Washington, Maryland, Delaware and New Jersey-are leading the United States' transformation into a global, entrepreneurial and knowledge- and innovation-based New Economy, according to The 2008 State New Economy Index, released by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation (ITIF). The report is the result of an initiative to inspire young people around the world to embrace imagination, innovation and creativity.

Mississippi and West Virginia ranked lowest among the states in making the transition to the New Economy. The other lowest-scoring states include, in reverse order, Arkansas, Alabama and Wyoming.

Regionally, the New Economy has taken the strongest hold in the Northeast, mid-Atlantic, Mountain West and Pacific regions; 14 of the top 20 states are in these four regions. In contrast, 16 of the 20 lowest-ranking states are in the Midwest, Great Plains and Southern regions.

The Index builds on the 1999, 2002 and 2007 reports, using 29 indicators to rank each state on the extent to which its economy is structured and operates to effectively compete nationally and globally. It divides the indicators into five categories that best capture what is new about the New Economy: knowledge jobs, globalization, economic dynamism, transformation to a digital economy and technological innovation capacity.

The principal driver of the New Economy, according to the Index, is the information technology revolution that, since the mid-1990s, has driven increased productivity and transformed virtually all industries. This IT engine is unlikely to slow down anytime soon. For the foreseeable future, the most promising New Economy advances will relate to a state's ability to use information more effectively.

States at the top of the ranking tend to have a high concentration of managers, professionals and college-educated residents working in knowledge jobs-those that require at least a two-year degree. With only a few exceptions, manufacturers in these top-ranking states generally are more geared toward global markets, both in terms of export orientation and the amount of foreign direct investments.

To read the entire story and to see where New Hampshire ranks (#13), go to http://www.kauffman.org/Details.aspx?id=5812